Canadian government says, “No more 40-year mortgage for you!”

Canadian Government Says, “No More 40-year Mortgage for You!”In a move aimed at “protecting and strengthening the Canadian housing market,” the Government of Canada today announced pending adjustments to the policies of Canada Mortgage and Housing Corporation’s (CMHC) mortgage insurance programs.


At the top of the do not approve list is the 40-year mortgage. Effective October 15 of this year, CMHC, Canada’s housing agency won’t be insuring mortgages with amortization periods of more than 35 years.


Zero-down mortgages also meet their end when the new policies take effect. All CMHC insured mortgages will require a minimum down payment of 5%.


Other changes include the establishment of “consistent minimum credit score requirements” and the introduction on “new loan documentation standards.”


“Today’s announcement marks a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-Style housing bubble developing in Canada.”


Prior to November of 2006 when CMHC relaxed its standards, the maximum amortization period allowed on a government insured mortgage was 25 years and a minimum down payment equal to 5% of the purchase price of the home was required. Introduced as “financial innovations,” zero-down mortgages and 40-year mortgages added fuel to a housing market that was already out of control in a number of Canadian cities.

Record house price increases followed in a number of Canadian cities including Saskatoon and Regina.

How do you see these changes affecting the Saskatoon real estate market?


Read the announcement here.

Read the Globe and Mail coverage here.

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Norm Fisher
Royal LePage Saskatoon Real Estate